BILL O'REILLY, HOST: In the "Unresolved problem" segment tonight: traditional America vs. secular-progressive America. Where will the new Obama administration take the country?

As we reported, the far left is emboldened now that Barack Obama has been elected president. And nowhere is the radical left government more on display than in the city of San Francisco.

Once a working class town blessed with natural beauty, San Francisco has embraced a secular liberal culture that is now dominant in city government. The result has been a drastic change on the streets of San Francisco. Karl Malden and Michael Douglas would not recognize it.

UNIDENTIFIED MALE: It's all one. Do you know what I mean? Everybody treat each other like one, you know, because we all in the same basket together.

UNIDENTIFIED FEMALE: You can feel a bit unsafe. It's important to develop the routines where you go. On the same hand, you also get to know your local homeless.

UNIDENTIFIED FEMALE: I live right there, and I have yet to walk on that sidewalk. I just don't go there.

UNIDENTIFIED MALE: I have been arrested everywhere there is, and the cops here are the best that there is, although there is some like terrorist cops. I have yet to see anyone arrested for smoking marijuana.

JESSE WATTERS, "O'REILLY FACTOR" PRODUCER: If you see someone smoking marijuana, what do you do usually?

UNIDENTIFIED MALE: I usually make an arrest.

UNIDENTIFIED MALE: They really don't even arrest people for smoking marijuana.

UNIDENTIFIED MALE: I actually think the police force in San Francisco is quite progressive.

UNIDENTIFIED MALE: San Francisco allowed me to be the transgender unique woman that I am. But I choose to be flamboyant, erotic, whatever else. That's my expression to myself.

UNIDENTIFIED MALE: You got the hookers, you got the homeless people, you have got pimps, you got everything out here. This place is alive. It's happening.

UNIDENTIFIED MALE: It's the biggest melting pot in California.

UNIDENTIFIED MALE: It's heaven and hell on earth.

UNIDENTIFIED FEMALE: It's not very pretty. You know, my daughter goes to school here, and it's not always pleasant.

UNIDENTIFIED MALE: Man, this city is the land of opportunity. But also, this is the city of freaks, man. And you should know this, America.

UNIDENTIFIED MALE: Hey, have a great day. San Francisco's awesome. Ciao.

(END VIDEO CLIP)

O'REILLY: SP America. With us now, "Factor" producer Jesse Watters.

Now I sent you out there because you had never been to San Francisco before. I wanted somebody out there who had never seen it. Initial impression?

JESSE WATTERS, "O'REILLY FACTOR" PRODUCER: I felt like I was at a Grateful Dead concert. There were people smoking pot on the streets. It smelled very sweet. You know, people smoking pot right outside the police stations. There was a drug deal going on right outside of city hall. You know, a lot of these women are rolling their strollers with their kids right next to needles, hypodermic needles, in the park. It's very dangerous.

In New York, you see the homeless people, they're might be one or two at a time. And in San Francisco , they travel in packs. You have your vagabonds, you have your street kids, your runaways, your '60s hippie retreads. And they're pretty aggressive.

And then at nighttime, forget about it. It's like you're in Amsterdam. You have the neon signs. You have the advertisements for the massage parlors, the strip clubs, the porn shops.

O'REILLY: Almost every city has a Tenderloin district. I mean, the North Beach in San Francisco is that. But the regular folks who live there in the city, did you find that they were fearful? Angry? Or were they accepting of this?

WATTERS: I think they're very tolerant. I think some people are pretty fearful. But like the woman said on the package, they change the routine. If they want to avoid a certain area, they do that. But there's this enlightened attitude where they feel like anything goes, and they don't want to make any judgment about other people because they think that might not be politically correct.

O'REILLY: Did you find a lot of outrage then among the folks? They were accepting of this kind of stuff?

WATTERS: I think they've basically have been worn down by this. They factor it into their regular lifestyle and routine. It's par for the course.

O'REILLY: All right. You live in the New York area. San Francisco worse than New York on the streets and all of that?

WATTERS: Well, I found in Central Park at night now, at least after Rudy Giuliani, you can go out at night and walk around and feel safe. But in San Francisco, you don't even go near some of these parks at night.

O'REILLY: No, you wouldn't go to the Presidio at night in San Francisco. I wouldn't. So you felt that New York, or you feel that New York is much more under control than San Francisco?

WATTERS: It is. In New York, you know, you have your pockets of bad places. But in San Francisco, it's prevalent throughout a lot of the city.

O'REILLY: So wherever you went, Fisherman's Wharf and all that, you saw these guys?

WATTERS: Almost every single neighborhood has this dark underbelly that seeps into their regular society.

Content and Programming Copyright 2008 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2008 ASC LLC (www.ascllc.net), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, LLC'S and ASC LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.